Did Audi have its own gasoline emissions defeat switch, too?

When it comes to its diesel
emissions scandal, Volkswagen finds more bad news and a new bottom every
month. The most current: VW group chairman Hans Dieter Poetsch is being
associated directly with the situation from his days earlier this
decade as VW’s CFO. German prosecutors now say they have enough evidence
to declare Poetsch as a third suspect in the
was-VW-quick-enough-to-tell-the-market flap.

And there’s more mixed news: Both German and
US publications say there may be Audis running around the US with
unauthorized software that reports Audi diesel and gasoline vehicles are compliant with CO2 emissions standards (when they’re not). Audi is a Volkswagen Group subsidiary.

Market manipulation?

There are two Volkswagen story lines active.
One is what happens to the half-million VW owners here, and more abroad,
who have diesel VWs (also Audis and Porsches): Will their cars be fixed
and how soon, and will VW’s payments cover the lost value and hassles
of going to and from the dealer. The big story this week is who knew how
much about VW coming clean in a timely manner. Investigators are
investigating whether VW was slow to tell all it knew, perhaps out of
fear of causing even more damage to VW’s stock price.

Monday, German prosecutors confirmed they are
investigating current supervisory board chairman Poetsch. A day earlier,
a VW statement had said the probe now included Poetsch, as well as
(announced back in June) former CEO Martin Winterkorn, all in connection
with Volkswagen 2015 news and financial statements, specifically: Did
VW delay the news to keep the stock price propped a little while longer.

On the one hand, the news was going to come
out sooner or later. On the other, investors who bought VW stock without
knowing more about VW’s situation might be annoyed (read: potentially
litigious). Plus, companies are supposed to report, right away, news
that affects investors and regulators. In 2015, Poetsch was VW Group’s
CFO, meaning someone involved in compiling information that would affect
VW and VW investors. The New York Timesreported
his potential transgression is “failing to notify shareholders quickly
enough of the financial risks of the diesel emissions cheating scandal,”
thus violating securities laws.

Poetsch has been at VW since 2003; previously
he was at parts supplier Duerr AG and at BMW AG (as controller). He had a
reputation for being calmer and more in the background than some other
VW executives, which may have helped him become CEO. According to Automotive News,
“One of the last survivors of an inner circle that included Winterkorn
and former Chairman Ferdinand Piech, Poetsch was seen as a safe bet to
guide the company through turbulent times given his skills as a
behind-the-scenes conciliator.”

Possible issues with 3-liter V6 cars

VW’s main problem is with its 2.0-liter diesel
engines, 475,000 in the US alone. VW acknowledges they’re programmed to
bypass emissions controls except when the engine computer believes the
car is being emissions-tested. In the US, VW and the government have
agreed on fixes and penalties: $10 billion to repair and/or back the
vehicles plus payments for lost value, and $5 billion in fines or
mitigation payments. Some 800,000 vehicles in Europe are affected, too.

A similar problem exists with V6 diesels used
in Audis, Porsches and VWs. There are separate negotiations on possibles
repairs or buyback. A federal district judge gave VW until November 30
to come up with a plan to repair or buy back some 80,000 affected
vehicles.

The newest news involves reports that Audi
vehicles are running software that allows carbon dioxide emissions to be
higher than allowed limits except when the car is being tested for
emissions. What’s worse is that the software defeat routine may be
installed on gasoline as well as diesel Audis.

The Wall Street reported that technicians at
the California Air Resources Board (CARB) were able to get an Audi on a
test bed to misbehave — run at a high emissions level — simply by
turning the steering wheel back and forth, making the car believe it was
on the open road. Reportedly the defeat device was in Audis made
through May 2016, some nine months after the four-cylinder emissions
tricks surfaced.

2017 VW Atlas SUV

Where VW Group and owners stand now

VW Group stock is lagging. The company is on
the hook, from the diesel scandals, for payouts amounting to at least a
quarter of the company’s net work (market cap). Dealers are unhappy that
they have unsold cars on their lots and uncertainty what they can do
with them, since they can’t be sold until they’re fixed. Owners are
cranky because their cars have reduced resale value.

On the other hand, VW is forging ahead with
new models, particularly the USA-centric Atlas, a three-row SUV about
the size of the best-selling Ford Explorer. VW has a cadre of loyalists
who like that Volkswagens handle like low-cost BMWs. Cranky as VW diesel
owners are, they’ll probably come out ahead: They’ll get their cars
fixed (eventually) and they’ll get a nice “restitution” payout
for the inconvenience: $5,100-$9,800. They can have Volkswagen buy
their cars back for the blue book value of the car in the month before
the emissions scandal went public. If they already sold their cars
privately, seller and buyer split the oops-sorry payouts. The only
owners who won’t be satisfied are the ones who wish they got back the
original purchase price. That won’t happen.

Some older VW TDI cars can’t be fixed and VW
won’t offer to fix them. Those owners will have to take the buyout
although they can wait a year or so; the cars won’t be taken away from
them. People who leased can turn the cars in at any time with no
penalty.

Meanwhile, those with diesel VWs still on the
road are looking at high mpg, affordable long range driving. Some VWs
will travel 700 miles on a single tank of diesel. They just won’t leave
the air as clean as it should be.

Did Audi have its own gasoline emissions defeat switch, too?
Reviewed by Chidinma C Amadi
on
3:32 PM
Rating: 5